Buy now, pay later companies must adhere to credit card standards, consumer agency says

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By CORA LEWIS (Associated Press)

NEW YORK (AP) — Buy now, pay later companies must provide consumers with the same legal rights and protections as credit card lenders do, the Consumer Financial Protection Bureau said Wednesday in a new rule.

That includes the right to demand a refund and to dispute transactions. The agency began an inquiry into the short-term lending industry two years ago, and it issued the rule in response to ongoing consumer complaints, it said.

Here’s what you need to know.

WHAT’S BEHIND THE NEW REGULATION?

Buy now, pay later loans are typically marketed as zero-interest, or low interest, and allow consumers to spread out payments for purchases over several weeks or months. They’re marketed as a way to buy expensive products and services over time, and the service is typically offered at checkout for online shopping. It’s often used for big-ticket items, like furniture, clothes and airline tickets.

In a report, the CFPB found that more than 13% of buy now, pay later transactions involved a return or dispute, and, in 2021, people disputed or returned $1.8 billion in transactions at the five companies surveyed.

“Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books,” CFPB Director Rohit Chopra said in a statement.

HOW IS THE INDUSTRY RESPONDING TO THE RULE?

Two major buy now, pay later players — Affirm and Klarna — say they welcomed the regulation.

“We are encouraged that the CFPB is promoting consistent industry standards, many of which already reflect how Affirm operates, to provide greater choice and transparency for consumers,” a company spokesperson said in a statement. Affirm currently offers “dispute and error resolution assistance,” the spokesman added.

A spokesperson for Klarna said the company also already investigates consumer disputes and covers related refunds.

The agency’s announcement is a “significant step forward” in regulating the buy now, pay later industry, Klarna said in a statement. It said it has been calling for regulatory oversight “over many years.”

While some in the industry have voluntarily chosen to operate at the standard now mandated by the CFPB’s new rule, there remain significant differences between credit card lending and buy now, pay later loans. For instance, buy now, pay later lenders do not all report their loans to the three major credit bureaus. Some analysts have said this can lead consumers to overextend themselves or take on more debt than they can manage or afford.

WHAT RIGHTS DO CONSUMERS HAVE?

The CFPB said that buy now, pay later lenders need to extend many of the same rights and protections as classic credit card providers. “Importantly, these cover dispute and refund rights,” the agency said.

The agency clarified that, with its new rule, buy now, pay later lenders must:

— Investigate disputes. Lenders must also pause payment requirements during the investigation and sometimes must issue credits.

— Refund returned products or canceled services. Buy now, pay later lenders must credit the refunds to consumers’ accounts.

— Provide billing statements. Consumers must receive periodic statements of money owed similar to the ones received for classic credit card accounts.

“The failure to provide dispute protections can create chaos for consumers when they return their merchandise or encounter other billing difficulties,” the CFPB said.

___

The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

Twins’ Edouard Julien trying to rule again

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WASHINGTON — It made its way through the Twins clubhouse this spring training until Edouard Julien finally heard it.

In the song titled “Edouard Julien, Are You Gonna Rule Again?” FanGraphs’ Davy Andrews, asks the simple question repeatedly.

“It was funny because I’ve never heard any song about me,” Julien said of the song, which was accompanied by a music video with multiple cutouts of his face bouncing around the screen. “I wasn’t expecting that.”

Tuesday, he was serenaded in person.

Andrews showed up at the Nationals Park pregame — Twins bench coach Jayce Tingler had told Julien that Andrews would attend a game in either New York or Washington D.C. — and after the Twins’ 10-0 win over the Nationals, he performed his song in the middle of the clubhouse with Julien sitting right next to him.

“Obviously I’ve heard (it) a lot in spring training, and it was good to have him in person here and get in front of the guys,” Julien said. “It was fun.”

The performance, starter Joe Ryan said, was “electric.” Manager Rocco Baldelli referred to the song multiple times as “a hit.”

Andrews’ song is set to the same tune as California rock band Wckr Spgt’s song about former French president François Mitterrand, replacing the lyric “François Mitterrand, do you have the heater on?” with “Edouard Julien, are you gonna rule again?”

“I think Eddy was loving it. The rest of the guys were loving it,” Baldelli said. “I think he added a new verse to what Jayce would call the ‘smash hit.’ I think he added a new verse for us, which is just lovely. I mean, great day.”

The music video was embedded in an article about Julien, posted to FanGraphs in late January, about Julien’s breakout rookie season. His sophomore campaign hasn’t gone quite as well thus far, but the second baseman is doing his best to try to rule again.

“I’ve just got to trust my approach and trust it’s going to work,” Julien said. “I keep going away from it and being indecisive. I’ve just got to trust it and ride it for a couple weeks and see how it goes.”

Julien excelled as a hitter in college, in the minor leagues and during his rookie year in the majors, so this has been something new for him, but it’s something Baldelli said Julien is well-equipped to handle.

“He can do this. There is nothing standing in his way,” Baldelli said. ” … He’s got a really good head for the game. There are a lot of things I could say that are really complimentary about the way he handles things, so he should be able to handle this. I have no doubt about it.”

Julien, who went 0 for 3 with a strikeout in the Twins’ 3-2 win over the Nationals on Wednesday, is hitting .207 this season with a .696 OPS. He’s encountered a recent rough patch and is hitless since May 15. Known for his eye at the plate, Julien hasn’t drawn a walk since May 11.

“It’s for sure tough when you don’t perform as well as you want to do,” Julien said. “You always feel like you’ve got to work and do all that stuff to get out of it, but sometimes it’s just get a rest and being in a better mental spot than you are, and I think that’s a problem for me. I think a little too much, and that’s the game. It’s not always physically. It’s always mentally. For me it is. I’ve got to be better with my approach.”

Baldelli’s 400th

It took eight tries, but the Twins manager finally captured his 400th win on Tuesday.

Though he’s never one to tout his personal accomplishments, Baldelli did enjoy the postgame moment, in which the team toasted him. Getting it done for Baldelli, center fielder Byron Buxton said on Tuesday, “was beautiful.”

“Any time there’s a good reason to get the team together for a few minutes after the game, that’s worth it to me,” Baldelli said. “I don’t like being out there and accepting things, but when it comes from our guys, it’s nice.”

A lineup card will eventually make its way to Baldelli’s Target Field office, where it will join the cards he has hanging from other milestone wins.

“It’s for the players so I can see all their names up there,” Baldelli said. “I don’t need to see it thinking about a personal record. It’s all about them in my mind.”

Briefly

Trevor Larnach was in the outfield on Wednesday for the first time since May 9 as he deals with a foot issue. Baldelli said Larnach still isn’t at 100% but playing the outfield was something they thought he could handle at this point. …  The Twins have Thursday off before hosting the World Series-champion Texas Rangers over the weekend.

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Twins salvage road trip with win over Nationals

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WASHINGTON — The Twins got a good reminder of everything their star shortstop can do on Wednesday.

Carlos Correa’s home run loomed large in the Twins’ 3-2 win over the Washington Nationals at Nationals Park, and his diving stop and strong throw with a runner on third was directly responsible for preserving their lead.

“We’re probably still playing or could be down if he didn’t play the way he did defensively,” manager Rocco Baldelli said. “That’s big-time stuff. He showed us a lot.”

Washington Nationals starting pitcher Jake Irvin throws during the first inning of a baseball game against the Minnesota Twins, Wednesday, May 22, 2024, in Washington. (AP Photo/Nick Wass)

The Twins (26-23) walked away from the nation’s capital with two straight wins, ending their road trip on a strong note after seeing their losing streak hit seven games on Monday night.

Correa, who also homered in Monday’s game, bashed a low first-pitch curveball from Bloomington native Jake Irvin in the top of the sixth inning out to left field. Irvin’s sinker, Correa said, was carving him up so he went up looking for a curveball instead.

It was one of two home runs that Irvin (2-5), a 27-year-old Bloomington Jefferson grad in his second full season, gave up against his hometown team — Max Kepler hit the other in the second inning — in an otherwise strong 6 1/3-inning start.

Irvin dueled against Twins starter Simeon Woods Richardson, who did not allow a run in his outing. With a well-rested bullpen and an off day coming up, Woods Richardson was pulled with two outs in the fifth inning so southpaw Steven Okert could face lefty CJ Abrams.

Okert rode in on the Nationals’ baseball-shaped bullpen cart — a tradition he started on a cold day in Washington when he was playing for the Marlins — and made sure to tip his driver with a $5 bill he had been carrying all series for the occasion. He retired Abrams and then threw a flawless sixth inning to preserve the Twins’ lead.

But in the seventh, the Nationals (21-27) made some noise against rookie Kody Funderburk.

Funderburk allowed a pair of hits before striking out former Twin Joey Gallo with both runners in scoring position. Funderburk made way for Griffin Jax, who induced a groundout to Carlos Santana at first, allowing one run to score.

It looked like the game-tying run was going to score when Jacob Young sent a ball Correa’s way, but the 2021 Gold Glove Award winner made a diving stop, hopped to his feet quickly and fired a strong throw to Santana, who scooped the ball cleanly to get the speedy runner.

“I’m pretty determined to just do everything possible to finish the play,” Correa said. “I didn’t want the game to get tied at all and it was too hot to play extra innings.”

That kept the Twins’ lead 2-1, and it remained that way long enough for the Twins to tack on an insurance run — Kepler doubled and Ryan Jeffers snapped an 0-for-16 streak, driving him in — in the ninth inning.

It was an important one as Jhoan Duran gave up his third home run of the road trip before stranding a runner at second base to pick up the save and salvage the series.

“We’re playing with confidence. We’re playing with conviction. We’re taking quality ABs,” Woods Richardson said. “We’re putting the bat on the ball. We’re creating pressure. Our offense is creating pressure. We’re doing a lot of quality things for quality wins right now.”

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Opinion: Bias Fuels Source of Income Discrimination

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“…much of the documented illegal discrimination is based on fears, bias, and stereotypes about the people who possess the rental subsidies and has less to do with the structure of the subsidy programs.”

NYC Commission on Human Rights

A poster aimed at curbing housing discrimination.

CityViews are readers’ opinions, not those of City Limits. Add your voice today!

Neil Garfinkel, counsel for the Real Estate Board of New York (REBNY), penned an op-ed in March and made the mendacious assertion that poorly run subsidy programs are the “main cause” for the harm inflicted on subsidy holders who encounter source of income discrimination.

Perhaps prior to writing this op-ed, he should have consulted with actual subsidy holders or people who are tasked with enforcing fair housing laws. Had he done so, he would have learned that much of the documented illegal discrimination is based on fears, bias, and stereotypes about the people who possess the rental subsidies and has less to do with the structure of the subsidy programs.

Source of income discrimination is still quite pervasive in New York City despite the passage of laws at the city and state level prohibiting it. Landlords, management companies, real estate brokers, and agents understand rental housing subsidies are provided to eligible lower income individuals and families, disproportionately tenants of color, tenants with disabilities, and single female-headed households with children. These are rent-burdened households who, absent a subsidy, might not be able to afford market rents. 

Here are some examples of what the Fair Housing Justice Center (FHJC) has seen in recorded undercover testing investigations and fair housing litigation:    

Outright refusals to rent, even when the asking rent is within rent payment standards and the tenant has a 100 percent subsidy which guarantees payment of all the rent directly to the landlord.

Segregated and unequal listings: A broker who told people with subsidies that the rental ads in their window were for “regular” people and there was a separate set of listings for “program” people. Many of the listings available to subsidy holders were not up to code and in such disrepair that they would not likely pass an inspection.

Dual and discriminatory rental processes: A major landlord maintained a dual track for prospective applicants. Tenants with subsidies were directed to an office where they spoke to an agent through a plexiglass window and were told to fill out a rental application that would allow them to be placed on a waiting list for a future available apartment. In contrast, tenants without subsidies were directed to a different leasing office and met with a leasing agent around a conference table and were immediately taken to view available apartments for rent before completing an application.

Comments from housing providers based on stereotypes about people with subsidies being lazy, contributing to increased crime, or being too poor to keep their apartments clean, making them a perceived threat to the health and safety of other tenants. Even though many households with subsidies do work, sometimes more than one job, another landlord commented that he preferred to only rent to “professional people” who work 9-5.

Not too many years ago, we saw evidence of this prejudice against people with lower incomes in some mixed-income housing developments. One developer set up a separate entrance or “poor door” for use by occupants of the affordable housing units. Other providers deemed tenants occupying affordable units as undeserving and denied them access to some of the common amenities in the buildings. So, bias against and mistreatment of lower income New Yorkers is not just felt by households with housing vouchers.

To be sure, we all want housing authorities or other agencies to modernize and become as efficient as possible for the benefit of tenants and landlords. Some have made strides in that direction. But to suggest the failure to do this accounts for the widespread discrimination against households with rental subsidies is simply not the way to begin an honest discussion about this issue. 

Housing providers must do business in the real world and comply with various regulations and laws that govern their activities. The overriding public interest and need to reduce housing insecurity for households at greatest risk of homelessness far outweighs any landlord inconvenience or insecurity about variations in housing subsidy programs. And, to the extent distinctions exist in the way local, state, and federal rental subsidy programs operate, this is another cost of doing business and certainly no reason to prevent otherwise qualified tenants from obtaining housing. 

Mr. Garfinkel also bemoans the fact that voucher holders must wait for what he terms an “unnecessary, mandated inspection process.” While we can agree that the required inspections need to be as timely, efficient, and thorough as possible, they are essential. Given the billions in taxpayer dollars spent annually on the provision of housing subsidies in this country, we need to ensure that tenants using the subsidies are able to secure decent, safe, and sanitary housing. 

As a renter, I wish there were more consistency, greater efficiencies, and standardized policies and practices among the hundreds of thousands of private rental housing providers in New York City. Renters are expected to engage in a time-consuming, costly, and anxiety-producing search process that involves navigating a confounding and complex maze of landlords, management companies, and real estate agents in the hope of finding one suitable, decent, and affordable housing opportunity.

As a friend of mine put it, “looking for an apartment in New York City is a little like Navy SEAL training, it is intense.” And he was not looking for an apartment using a rental subsidy. People with rental subsidies go through the same intense process while additionally enduring multiple acts of source of income discrimination during their search. Instead of focusing exclusively on how housing subsidy programs operate, Mr. Garfinkel and REBNY should take affirmative steps to combat the bias that drives much of the rampant source of income discrimination within the rental market. 

Fred Freiberg currently serves as the national field consultant for the New York City-based Fair Housing Justice Center (FHJC).